Will the doctor’s office go the way of the retail store, even in NJ? Can we improve population health through telephone call centers? Will the UK get its mojo back in digital health innovation? Can the VA implement Cerner by 2019? And will ATA appoint a new CEO before then?

Connected Health Summit: Engaging Consumers analyzes the roles of connected health technologies and innovations in driving changes in consumer behaviors and business models. Now in its fourth year in beautiful San Diego, this event is focused on data-driven, human-centric patient experience and engagement. Keynoters include executives from Aetna, UnitedHealth, ShareCare and Geisinger. Readers save 20 percent! For more information, click on the advert or here.

Consultancy acquisitions the latest trend–who’s next? Dublin’s UDG Healthcare acquired Philadelphia-based healthcare consultancy Vynamic last week, then topped it on Monday with marketing/communications company Cambridge BioMarketing. Cambridge has an unusual specialty–campaigns for orphan and specialty drugs and treatments with clients from small to large pharma and biotech. Vynamic, an industry management consultancy, provides services from strategic planning to process design and systems implementation.

This follows on the reveal earlier this month in Bloomberg of the potential sale of The Advisory Board’s healthcare practice to UnitedHealthcare. Last week, this Editor mentioned Evolent Health in Rock Health’s record-breaking review of first half 2017 funding. It turns out that publicly traded Evolent is partly owned by The Advisory Board, with a share valued at $170 million, and reportedly had been seeking funding to itself purchase The Advisory Board, now considered unlikely (BizJournals). What will happen to this share isn’t known.

The Vynamic acquisition is structured as an initial purchase price of $22 million with an additional consideration of up to $10 million payable over the next three years, based on the usual achievement of agreed profit targets, for a total of $32 million (€27.8 million). Irish Times Vynamic will join UDG’s Ashfield Division. Release For Cambridge, it’s a similar arrangement of $30 million (€26m) paid up front, with the potential for an additional $5 million (€4.3m) paid over the next 12 months, again dependent on achieving financial targets. RTE.ie, Release

As predicted, a torrid start to the year.StartUp Health‘s 2nd quarter and first half funding estimate shattered records–$6.5 billion first half, $3.8 billion 2nd quarter compared to $8 bn and 500+ deals in full year 2016. StartUp Health takes a wider sample than Rock Health, tracking over 300 international company deals, including those below $2 million, in service and biotech/diagnostic companies. A change from last year is that there are more Series A than seed deals, concentrating on workflow, big data/analytics, wellness, medical device, and personalized health-Quantified Self companies. Series B deals are well-populated, but there is still a long bridge to C and above. San Francisco and the Bay Area continue to substantially lead in deals made, with Chicago at 39 percent and New York at 25 percent of deal value. They also trumpet the success of their funding family. Watch the video below or download the free report here.

StartUp Health is ‘over the moon’, breathlessly (appropriately as the home of the 25-year Health Moonshot) with Q1 trending, seeing the biggest investment quarter since 2010 at $2.5 bn. Topping up this number was GRAIL, which is developing a blood test for early cancer detection, with a massive Series B at $914 million. Far behind it in the $85-110 million range were (in descending order) Alignment Healthcare (population health), PatientsLikeMe (patient/consumer experience), Nuna (big data/analytics), and PointClickCare (EHR). Population health, patient/consumer experience, and research top their investment activity. Most deals are still seed and Series A (59 percent), but that is down five points from full year 2016; Series B’s share is up three points to 25 percent. But it remains a difficult bridge to cross to C+ rounds.

Rock Health splits the difference and calls it ‘business as usual’, surprised that there hasn’t been a tailspin. Its Q1 sandwiches between 2016 and 2015, well above 2015 but trending 23 percent below Q1 2016. Their biggest deals include the aforementioned Alignment, PatientsLikeMe and Nuna, omitting GRAIL and PointClickCare. Their top three investment categories are analytics/big data, care coordination, and telemedicine (over $50 million). Rock Health tracked almost 20 M&A, noting that many transactions are now ex-California. They also uniquely track public company performance. Here in 2016 is where Readers first noted weakness in NantHealth, but Fitbit and Castlight Health also had miserable quarters. Teladoc, Evolent Health (consulting), and Care.com had a good winter as well. Let’s see what Q2 brings.

It depends on the study you read and how jaundiced your view is. If you believe the StartUp Health Insights 2016 ‘Health Moonshots’ report, 2016 digital health funding has hit a zenith of $8.18 bn (up 38 percent from 2015), with 500 companies enjoying funding from over 900 individual investors. Yet over at fellow funder Rock Health, the forecast is far more circumspect. They tracked only half the funding–$4.2 bn in funding–with 296 deals and 451 investors, down from the $4.6 bn over 276 deals in 2015.

There are significant differences in methodology. Rock Health tracks deals only over $2 million in value, while StartUp Health seems to have no minimum or maximum; the latter includes early stage deals at a lower value (their cross-section of ~$1 million deals has 15). StartUp Health gathers in international deals at all levels (pages 11-12), whereas Rock Health only includes US-funded ventures. Another observation is that StartUp Health defines ‘digital health’ differently than Rock Health, most notably in ‘patient/consumer experience’, ‘wellness’ and ‘personalized health’. This can be seen by comparing their top 10 categories and total funding: (more…)

Becker’s Health IT and CIO Review has written up a US-centric review of recent advances in telehealth and telemedicine but kicks it off with the confusion level between the two terms. Internationally, and in these pages, they are separate terms; telehealth referring primarily to vital signs remote monitoring, and telemedicine the ‘virtual visit’ between doctor and patient, between two clinical sites, or ‘store and forward’ asynchronous exchange (e.g. teleradiology). Somehow, in US usage, they have been conflated or made interchangeable, with the American Telemedicine Association (ATA) admitting to same, and American Well simply ‘just doing it’ in relabeling what they provide. On top of it, the two are incorporating elements of each into the other. Examples: TytoCare vital signs measurement/recording into American Well’s video visit; Care Innovations Health Harmony also providing video capability.

Of particular interest to our international readers would be the high rate of US growth in telemedicine utilization from 7 to 22 percent (Rock Health survey). Teladoc, the largest and publicly traded provider, passed the milestone of 100,000 monthly visits in November and the ATA estimates 1.25 million from all providers for 2016 (Teladoc release). Other US competitors include the aforementioned American Well, MDLive, and Doctor on Demand, the latter two also selling direct to consumer. They also compete against doctor-on-house call services like Pager and Heal. Reimbursement remains an issue both privately and publicly (Medicare and Medicaid) on a state-by-state level, with telehealth experiencing significant difficulties, as well as internet access, speed, and usage by older adults.

This Editor observes that digital health is at the state of maturity (so to speak) where entities assemble a Top 50 list and host a dinner to pass out awards. Rock Health, Fenwick & West, Goldman Sachs and Square 1 Bank cast a wide net from investment to startups in their just-released list. (Of course there will be a glitzy dinner, soon, at the kickoff of the JP Morgan Healthcare Conference, 9 – 12 January 2017 in San Francisco. Want an invite?)

Of great delight is an award to John Carreyrou of the Wall Street Journal as Reporter of the Year for his investigative work on Theranos. Other highlights are Validic (clinical/wellness data integrator) as Fastest Growing Company, Evolent Health for Best Performing IPO and BSX Technologies‘ LVL hydration monitor as Crowdfunding Hero (having raised $1.1 million when goal was $50,000). Rock Health website

What is increasingly curious to this Editor is that digital health companies, in nearly all cases, aren’t crossing borders and oceans. Every one seems to stick and be unique to its own country of origin, creatures of their own unique petri dish.

Most funding deals go to Series A companies, with seed rounds equal in number but not amount (33 and 32 percent, under $100 million and $400 million respectively).

Later stage companies still don’t have ‘legs’. Subsequent rounds after Series B (18 percent) continue to be weak (apparent since the beginning of these tracking reports). Series B now accounts for 18 percent of deals, $600 million in funding. Series C through E drop off precipitously from $400 to well below $100 million.

Median on rounds haven’t moved much: $3.9 million Series A and seed, $17 million in B/C, $21 million D and after.

Given the regulatory environment and the wisdom of going slow in health tech (poster child–Theranos), this also points to a disconnect between the Silicon Valley mentality of ‘make it quick and exit’ and reality.

IPOs have been a mixed picture, with most fluctuating in price and market cap, few making it to their IPO price.

International deals range from League in Toronto, Early Sense in Tel Aviv and Ping An Good Doctor in Shanghai, the last of which at $500 million beat the $400 million funding of payer Oscar for top funding honors.

An interesting addendum to the report is the 50+Market, which includes companies which are relevant to 50+ needs and those which focus on it. Interestingly, half of investment is residing here and skews heavily towards Series B and later stage companies. StartUp Health page (download). The report for viewing only is on Slideshare.

click to enlargeAnd we were having such a good time! UPDATEDHaving ridden a few hype curves (in health tech and out–remember airline deregulation?) and with the bruises to prove it, this Editor believes that she can spot a Cracking Market at forty paces. The hands on the clock appear to be near closing time, even as we party on. After all, DTC telehealth is forecast to be $25 bn in the US by 2025 (GrandView Research), if we make it that far!

Where are the sharp noises coming from?

The continuing fail of unicorns like Theranos [TTA 4 May and prior], now resorting to bullying the Wall Street Journal and negotiating with the alphabet (SEC, DOJ, FDA, CMS…), and the troubles of Zenefits.

Another notable unicorn, the doctor booking site ZocDoc, being called out at last on their customer churn, low margins, and high customer acquisition costs. (As well as an irritant to doctors and office managers) New York Business Journal

Extremely high and perhaps insane rounds of funding to young companies with a lot of competition or a questionable niche. Higi is an odd little kiosk + consumer engagement program located in primarily Rite Aid drugstores–odd enough to score $40 million in its first venture round. (Ed. note: I shop at Rite Aid–and have never seen one.)This is after the failure of HealthSpot Station, which burned through approximately $43 million through its entire short but showy life. The low-cost, largely exchange plan insurer Oscar Healthraised $400 million this February ($727 million total) while UnitedHealth and others are dropping money-losing plans in most states. Over 50 percent of exchange co-ops went out of business in 2015, leaving doctors, health systems and patients holding their baggage. Again, low margins, high cost and high customer acquisition costs.

We’ve previously noted that funders are seeking ‘validation in similarity’–that a few targeted niches are piling up funding, such as doctor appointment setting, sleep trackers and wellness engagement [TTA 30 Dec 15]

Tunstall’s continuing difficulty in a sale or additional financing, which influence the UK and EU markets.

NEWMore patent fights with the aim of draining or knocking out competition. We’re presently seeing it with American Well litigating Teladoc over patent infringement starting last year, which is only now (March) reaching court. It didn’t stop Teladoc’s IPO, but it publicly revealed the cost: $5 million in previously unplanned lobbying and legal costs, which include their fight with the Texas Medical Board on practicing telemedicine–which is beneficial for the entire industry. (But I would not want to be the one in the legal department explaining this budget line.) Politico, scroll down. But these lawsuits have unintended consequences–just ask the no-longer-extant Bosch Healthcare about the price of losing one. (more…)

click to enlargeFunding’s up, but the digital darlings have changed. The stock market and tech sector may have been uncertain kicking off 2016, but digital health wasn’t. Rock Health’s first report for 2016 exudes optimism. Compared to the same quarter in 2015, funding increased nearly 50 percent to $981.3 million, the highest amount since 2011. But the devil may be in the details:

Seed and Series A raises were still well over half–54 percent, over the 50 percent in 2015

Later stage deals (Series D and above) shrank to 13 percent in 2016 from 35 percent

Top categories also demonstrated the fickleness of funding favorites. Only two categories in the top six were carry-overs from 2015: wearables (driven by Jawbone) and consumer engagement. New favorites: analytics/big data, population health management, consumer health information and EHR/clinical workflow.

There were no venture-backed IPOs in the quarter, and public company performance was down (9 percent y/y)

The new picture favors what to do with the data–finding trends and putting them to use both consumer and clinical sides. And exits were popular as well: 187 was the Rock Health count, with fitness wear Asics‘ acquisition of the Runkeeper fitness wearable and provider One Medical acquiring the Rise app. Will the trend continue in 2nd quarter? Stay tuned….Rock Health Q1 Update

The ‘silly money’ is packing its bags and taking the next flight from the Coast. An exceedingly tart take out of Fast Company confirms what your Editors have noticed in Rock Health and other year-end reports. Funding for digital health may have surpassed $4.2 billion in 2015, but it barely eked over 2014’s total of $2.3 billion despite rising geometrically since 2011 [TTA 16 Dec 15, revised by Rock Health since then]. Since then, we’ve had the Trouble Every Day of ‘unicorns’ (overreaching) Theranos and (ludicrously) Zenefits [TTA 17 Feb]; EHR Practice Fusion stalled out and cutting 25 percent of its staff, hoping to be acquired by athenahealth–or anyone (Healthcare Dive); shaky Fitbit shares [TTA 20 Feb]. Perhaps the high point was last year’s ‘Corvette Summer’ with yet another big round to a company yet to fulfill its promise, ZocDoc [TTA 15 Aug 15]. Even Castlight Health with decent revenue (still at a loss) has been dubbed an ‘absolute horror show’ when it comes to its share prices, if you were foolish enough to buy it at or near its IPO.

Fortunately a large dose of sanity may prevail among VCs with a sobering realization–no different than five or ten years ago–that investment has to be strategic and far longer than the usual 18 month-and-out time frame. Too many companies have systems which work the same niche–you don’t need 50 companies doing these things: data analytics for care management, patient engagement platforms, med reminders or diabetes management. [We’ve already noted the ‘sameness’ in companies getting funded in 2015, almost as if investors were seeking reassurance in similarity, a sure sign of a coming fail–TTA 30 Dec 15.]

Mobihealthnewsrounded up 2015’s hot funding in the mobile health/health tech-related space, with helpful links to their articles. They cite as we have previously [TTA 16 Dec] Rock Health‘s flattish year-to-year 2015 total of $4.3 bn, but also StartUp Health’s bloom-off-rose 2015 digital health total of $5.8 bn–larger than Rock Health’s tote, but 17 percent off their 2014 total of $7 bn. If you consider the proportions: the top 10 deals raised $738 million–$130 million alone to the endlessly funded but yet to take over the world ZocDoc –the roster below $20m remains the longest, which is completely in accord with the lower part of Rock Health’s pyramid of angel-A-B rounds.

Yet Aditi Pai’s detailed summary strikes this Editor as useful in an unanticipated way. There is a certain sameness in the products and services of these companies, as if funders are seeking validation in similarity. ZocDoc, DoctoLib and Vitals–doctor profiles and appointment booking. Sharecare, Welltok, Novu, Noom, AbilTo, SocialWellth, Health Recovery Solutions, Jiff–health and wellness engagement programs/apps, many for corporate programs. Whoop, Sano, Sproutling, TuringSensor, Valencell, Moff and four others–wearables. Hello, Sleepace, Sproutling (baby)–sleep tracking. Klara, SkinVision, Spruce–dermatology apps. Beyond the gloomy forecast for unicorns (Theranos being the Child on the Milk Carton), how many of these corporate wellness programs, sleep trackers and wearables will be around in 2017? Mobihealthnews’ 2015 funding roundup.

MedCityNews takes a lighter-hearted (I think) look at 2016 deals. IBM would buy athenahealth mainly for its EHR and practice management data, plus data aggregator Validic, to beef up Watson; 23andMe, past its two years of troubles after stepping on FDA Superman’s cape, would buy PatientsLikeMe (endangering its community shaped credibility? 23PatientsLikeMe?) and the best–Theranos bought by Boston Heart Diagnostics/Eurofin (EU lab testing giant), which would reduce this unicorn to a pony…but one that might make it. Theranos also made VentureBeat’s list of Likely Carcasses in the Valley of Unicorn Death (to quote the article’s author). Chris Seper’s Deals He’d Like To See.

Rock Health published yesterday their 2015 annual Digital Health Funding report, and perhaps it is good news that 2015 activity maintained the blazing 2014 total at $4.3 bn. Still, it represents a compound annual growth (CAGR) from 2011-2015 of 30 percent.

Consumer digital health is thriving, with healthcare consumer engagement, personal health tools and tracking accounting for 23 percent of overall funding. Two of the six largest deals were won by consumer-driven genetic companies, 23andMe and Helix.

The one new record was that there were 278 deals across 248 companies, with an record-breaking average deal size of $15.6m. What continued is that the vast majority of funding deals (70 percent) were Series B and below, but C and C+ deals increased slightly. It was also a big year for exits. M&A activity nearly doubled in volume with 180 deals and $6B in disclosed activity. Their index comprising shares of publicly traded digital health companies was off over 5 percent with two of this year’s IPOs trading lower than their opening prices.

According to the Rock Health newsletter, early-funded companies had a few zombies among them. Rock Health looked at companies up to five years ago, and found that 11 percent they classified as either dead or “zombies” (which have not raised a round in 3+ years). “Most likely to die? A disproportionate number of these zombie companies are in the care coordination, EHR, or clinical workflow space.”

The web page with a link to the full study is here. Unfortunately, the download is not free, but $99.

click to enlargeBetter is sadly not. This two-year old service that provided personal health assistance, including a real, live health assistant, to guide members through health questions, the thickets of insurance claims, finding doctors and specialists, apps and more, announced earlier this week that it was ending operations as of 30 October. While it was announced via their Twitter feed on Tuesday, most of the industry learned of it through Stephanie Baum’s article in MedCityNews today. Better formally debuted only 16 months ago [TTA 23 Apr 14] and at the time this Editor felt that it was a service in the right direction, a kind of ‘concierge medicine for the masses’ needed when individuals have to direct more and more of their own care.

A solid start, as our Readers have seen, does not guarantee success, but this fast fail is still fairly shocking. A concern at the time was the pricing for the full service model at $49/month, which later became the family price (individuals were $19.99/month). CEO/co-founder Geoff Clapp was among the most Grizzled of Health Tech Pioneers; he had been a co-founder of Health Hero/Health Buddy from 1998 to its sale to Bosch Healthcare, a very long pull in telehealth, and he had spent much of his post-Health Hero time generously advising other startups. Yet despite the involvement of blue chip Mayo Clinic as a service provider, its financial backing from their investment arm and socially-oriented VC Social+Capital Partnership, it managed to raise only its initial seed funding of $5 million (CrunchBase).

Bessemer Venture Partners has been a major investor in healthcare tech for over 30 years, not only with Rock Health and their eponymous fund, but also with WellTok, MindBody, Health Essentials, DocuTap and others. Observations from one of their VPs include that the IPO window for digital health has been only open a short time–six months; B2C and B2B2C sectors have been resilient, with ‘Uber for healthcare’ concepts like PillPack [TTA 14 July] gaining traction; and that they like a third-party administrator concept for employee population health called Collective Health. Rock Health blog.

Rock Health‘s 2015 report is revealing in one aspect–that the authors try to put a game face on what is a flat situation in digital health investment for first half. Not even the most optimistic of the digerati expected a lift of 16 percent as we saw in 2014 versus 2013 [TTA 2 July 14], but the 8.7 percent fall off from 2014’s blistering $2.3 billion to $2.1 billion in 2015 year-to-date was unexpected. StartUp Health’s report indicated a slower start to 2015, though slightly less, so the reports correspond. Digital health still is growing faster than software, biotech and medical device.

* In M&A action, this year’s first half has almost matched 2014’s full year total, but with only 13 percent of the investment. Most are digital health companies acquiring others for small amounts. (more…)

Our definitions

Telehealth and Telecare Aware posts pointers to a broad range of news items. Authors of those items often use terms 'telecare' and telehealth' in inventive and idiosyncratic ways. Telecare Aware's editors can generally live with that variation. However, when we use these terms we usually mean:

• Telecare: from simple personal alarms (AKA pendant/panic/medical/social alarms, PERS, and so on) through to smart homes that focus on alerts for risk including, for example: falls; smoke; changes in daily activity patterns and 'wandering'. Telecare may also be used to confirm that someone is safe and to prompt them to take medication. The alert generates an appropriate response to the situation allowing someone to live more independently and confidently in their own home for longer.

• Telehealth: as in remote vital signs monitoring. Vital signs of patients with long term conditions are measured daily by devices at home and the data sent to a monitoring centre for response by a nurse or doctor if they fall outside predetermined norms. Telehealth has been shown to replace routine trips for check-ups; to speed interventions when health deteriorates, and to reduce stress by educating patients about their condition.

Telecare Aware's editors concentrate on what we perceive to be significant events and technological and other developments in telecare and telehealth. We make no apology for being independent and opinionated or for trying to be interesting rather than comprehensive.